Maybe I should post this in financial futures. I'm an outsider just curious to the inner workings of the mortgage business, especially concerned with understanding the basic model of creating mortgage products and hedging interest rate risk with models of securitization and more simply, in house handling. I'm curious for an easy to understand summary of what happens --- ie what options and/or what synthetic basis positions (not interested in specifics, just what they replicate, ie a put or call) are put on to replicate options. What are their risk scenarios as related to market interest rate moves, etc... Anyone know or can offer a link?
No I know that already... have you seen the stick figure CDO repackaging powerpoint presentation going around? investment banker versus the investor... 'fuck you... no fuck you...' http://www.krausecomputer.com/cdo.pps